Gambling Drug Fails Trials; Somaxon Shares Lower

By Douglas A. McIntyre Published Dec 5, 8:50AM EST

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Somaxon Pharmaceuticals (SOMX-NASDAQ) has announced essentially failed results from the company’s Phase 2/3 clinical trial evaluating 20 mg and 40 mg of oral nalmefene hydrochloride, an opiate antagonist, in patients with a diagnosis of pathological gambling.

Nalmefene is an "opiate antagonist class" that did not demonstrate a statistically significant difference compared to placebo on the primary endpoint for Pathological Gambling. Neither dose achieved statistical significance on the secondary endpoints in the trial. The most frequently reported adverse events were insomnia, nausea and dizziness. Elevation in liver enzymes was observed in some nalmefene-treated patients.

Somaxon intends to further assess the results and intends to assess the previously-reported results from its Phase 2 clinical trial evaluating nalmefene for smoking cessation before any program determination.

The company will now focus on completing and reporting the results from final Phase 3 trial for SILENOR(TM) for the treatment of insomnia, with results expected later this month. Prior Phase 3 clinical trials evaluating SILENOR(TM) for the treatment of insomnia were positive and if all data is as prior stated Somaxon expects to file a New Drug Application (NDA) with the FDA in the third quarter of 2007. The company has submitted the results of the genotoxicity studies to the FDA and is awaiting a response.

SOMX shares are down about 7% pre-market at $13.05, but shares were down 10% right afterthe news came out. The 52-week trading range for SOMX is $9.69 to $21.24, and SOMX has an implied market cap of about $230 million after the 7% pre-market drop. As of last quarter it had about $58 million in net liquid assets after liabilities and items were removed from the balance sheet. Its only revenues are generated from partner and grant payments and it has a cash burn rate of $11M to $15M per quarter.

While the company isn’t going to be happy, gambling addicts with insomnia is something the casinos can’t hate too much.

Jon C. Ogg
December 5, 2006

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.